Published on July 07, 2010 RRP: Know the law
Businesses often compare the price they are charging with the “Recommended Retail Price (RRP)” to show consumers how much they are saving by buying at that price. There are some important legal things to remember when using this strategy in your marketing tactics. A failure to understand the law will mean that the ACCC will be knocking on your door.
When using this strategy, here is the advice that the ACCC‘s website has for consumers with respect to RRP pricing strategies by businesses:
“If businesses do not normally price their goods at the RRP, it may be misleading to give you the impression that they do.
Look out for misleading or deceptive price comparisons. If you are not sure whether a price comparison is accurate, shop around and see what other traders are selling the product for. You can also ask the trader if they really did sell the product at a higher price before they claim to have reduced it.”
The outtake for this is not to compare your prices to the RRP unless you have actually previously priced your products at the RRP. A low markup pricing strategy is something you can certainly promote but where you are making specific comparisons about a particular product’s price, that comparison needs to be accurate.
The same goes for “was”-“now” pricing, where the old price is striked out and the new one shown. If a product is on sale the sale price needs to be for the duration of the sale only. You are not allowed to offer your products on permanent sale because otherwise customers are not getting the bargains that they think they are.
The ACCC acknowledges that in many cases, when businesses fall foul of the Trade Practices Act they do so unintentionally through lack of knowledge of their legal obligations. If you’re not sure of your obligations then one thing you can do is consider a trade practices compliance auditing firm – there are many in Australia that can do that for a reasonable price.
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